Finance GreenWire: City Car Club Gets £1.8m investment for major expansion plans

The new investment for the pay-as-you-go car business has been raised from existing private investors and consists of £1.2 million of new finance and the conversion of £600,00 of loan notes. Confidence in the company is at an all time high following a 90 per cent growth in membership in the past 12 months and the new money will help fund the expansion of its fleet as well as covering costs associated with the recent acquisition of rival car club operator WhizzGo.

Serial entrepreneur James Finlayson, City Car Club’s largest shareholder and managing director, said: "Our strategic acquisition of WhizzGo, combined with a 90 per cent growth in membership over the course of the last 12 months, meant we needed additional funding to keep up with demand. We are looking to grow our 500 strong fleet to 750 into 2011 and increase membership from 16,000 to over 25,000."

Finlayson was an early stage investor in City Car Club and after being excited about the potential within the business and car club sector he quickly stepped up to the md role and has been instrumental in the success of the company to date.

City Car Club has its largest operation in London and also highly successful and growing operations in Edinburgh, Leeds, Manchester, Brighton, Bristol and seven other cities. The club is also opening up new operations in Cardiff and Glasgow later this year.

The car club gives its members access to locally parked cars that can be booked online or over the phone at a moment’s notice for less than £5-an-hour. It’s a cost effective and greener alternative to owning a car and the club has experienced unprecedented growth during the recession as motorists and businesses have wanted to tighten their belts.

Speaking on its phenomenal growth record even through the last year of recession, Finlayson said: "Membership of City Car Club saves our members an average of £1,800 each year and the downturn has really made people think twice about car ownership." And he added: "A large reason for our growth has come from demand from businesses to reduce their transport costs as well as reducing their carbon footprint. Membership to a car club delivers on both fronts."

City Car Club is set to hit month on month profitability from quarter four 2010 and will continue to be profitable from this point. Commenting on this, Finlayson said: "This is a business concept that has been ahead of its time and is also very capital intensive meaning a relatively slow burn to profitability. It has been all about securing long term parking partnerships with city councils, getting to critical mass and getting the right ratio of members to cars to maximise revenue per car. We have now done much of the hard work and are all certainly looking forward to reaching profitability later in the year."